UK economy continues to recover from recession

The UK economy continued to recover from recession in the first three months of the year, according to official estimates.

GDP grew by 0.2% between January and March, the Office for National Statistics (ONS) said. That was weaker than the 0.4% growth predicted by many economists, but the figure may be revised. The last quarter of 2009 saw GDP growth of 0.4% - revised up from an initial estimate of 0.1%. The ONS said the bad weather seen at the beginning of the year may have had an impact on output - particularly in the retail and industrial sectors. But despite that, manufacturing output grew by 0.7% over the quarter, while the utilities sector saw output rise by 2.5%.

Manufacturing boost

However, the bulk of growth came from the financial and business services sector, which saw growth of 0.6%. Meanwhile the sector including retail, hotels and restaurants shrank by 0.7%. BBC economics editor Stephanie Flanders said the rise in manufacturing output was a particular cause for optimism. "What many will find most cheering in these numbers is the stonking 0.7% estimate for growth in the production sector," she said. "That's the strongest quarterly performance for that part of the economy in many years. Hopes of an export-led recovery are not dashed yet."

Other analysts were also optimistic, despite the growth figure coming in below expectations. Howard Archer, chief economist at IHS Global Insight, argued that the lower-than-expected growth figure was "not in itself overly worrying". "Overall growth in the first quarter was clearly dragged down appreciably by the very bad weather in January, and most indicators suggest that there has been a marked pick up in activity since then," he said. "Furthermore, there must be a very good chance that first quarter GDP growth will be revised up in future releases as more data for March become available and show improved activity."